Updates - blog still alive - I'm just busy

Hey,

It has been over 2 months since I last updated.  During this time, I received dividend payments for the following: 

Dividends XLNX 06/05/2013 = $2.29
reinvested to buy 0.0563 shares @ $40.67

WM: ex dividend date 06/05/2013. Dividend date 06/20/2013 = $4.44
reinvested to buy 0.1123 shares @ $39.54

MO: ex Div 06/12/2013. Dividend Date 07/09/2013
Dividends MO 07/10/2013 = $8.40
reinvested to buy 0.2316 shares @ $36.27

MDLZ: ex Div 06/27/2013. Dividend Date 07/14/2013
Dividends MDLZ 07/15/2013 = $3.43
reinvested to buy 0.1130 shares @ $30.35

KRFT: ex Div 06/26/2013. Dividend Date 07/11/2013
Dividends KRFT 07/12/2013 = $2.00.
reinvested to buy 0.0353 shares @ $56.66

I'll be back full time (hopefully) after my classes in August.

Updates From Previous Post: Mondelez, Altria and Kraft Dividends

First of all, an apology.  I thought Modelez (MDLZ) paid me $8.30 but actually, it was Altria (MO) paying me that dividend.  So here are the dividend payments from last week:

MDLZ paid us a dividend of $3.41 which we reinvested to buy 0.1116 shares @ $30.56.

KRFT  paid us a dividend of $1.98 which we reinvested to buy 0.0388 shares @ $51.03.

MO     paid us a dividend of $8.30 which we reinvested to buy 0.2339 shares @ $35.49.

I was probably tired last week and associated MO with MDLZ.  Oh well. :)

Automatic Investment Plan Results, Sector Risks and Cash Reserves

This is an update of the Automatic Investment Plan I executed last week.

 

My $434 bought 14.4152 MDLZ shares @ $30.11/share.

 

We now own 26.2504 MDLZ shares.   I expect to be paid $3.412552 in dividends (@$0.13/share).

 

With our new MDLZ total, our top five holdings are as follows:

 

1. AAPL  17.91%

2. GLD    14.26%

3. MDLZ 14.05%

4. LULU  13.92%

5. MO      11.48%

 

With this update, our portfolio's sector exposure has changed.  Before, the Computer and Technology sector was the bulk of our sector exposure due to Apple's meteoric rise in value which concerned me especially during the months when Tech was hated in Wall Street.  It took some time (and Apple's decline) but we were able to balance out our sector risks.  So now, the Consumer Staples Sector (29.28%) took the lead from the Computer and Tech Sector (24.10%).  I am still not satisfied and I think I need to bump up the rest of my sector exposures (Business Services 8.36%, Oil & Energy 10.17% and Retail Stores 13.82%).  My goal is to put each sector at 20% value of our portfolio which would make our portfolio's exposure risk as divers as possible. 

 

Why am I so focused with sectors?  Because Sector performance/sentiment pretty much affects about 50% of each stock's performance.  Going back to my original concern,  the Tech sector was pretty much hated by Wall Street in the summer months of 2012.  My XLNX position pretty much suffered while Apple held on to it's values for as long as it could.  It can get frustrating seeing XLNX pretty lose value or at best, stay the same while my Consumer Staple stocks (MO, KRFT & MDLZ) have carried our portfolio during those tough months.  Knowing how this affects stock prices, I am convinced that diversifying our Sector risk would be good for our portfolio.

 

In other news, I need to rebuild our cash position.  I should see opportunities to do so in my next few paychecks.  Now the question would be whether or not to buy more XLNX with an upcoming Ex-Dividend Date of 05/13/2013 or get some more WM to bump up our Business Sector position. 

 

We'll see.  We have until May 9, 2013 to decide.

Getting Stuff For Free, Apple (AAPL) May Boost Dividend Yield, Waste Management (WM) Pays Dividends, Mondelez (MDLZ), Xilinx Inc (XLNX) and Kraft's (KRFT) Ex-Dividend Dates!

I got an email from my discount brokerage. 

They gave me a free credit to use their Automatic Investment Plan service for free!  That's $4 savings! 

You might ask: "So what?"

I say: "Awesome!" 

Here's why, that $4 I would have paid (as commission) to buy stock would just go into buying more shares of the company I want to buy.  And when I'm about to chase the dividend distribution, every share counts!

Here's what I did:

Mondelez International (MDLZ)'s ex-dividend date is 03/27/2013.  I also looked into Kraft (KFRT) and Xilinx Inc (XLNX) ex-dividend dates, 03/26/2013 & 05/13/2013 respectively.  As you can see, I'll miss KFRT's must own date by a day and XLNX is just too far off.  That is why, I'm going with MDLZ.  Granted, MDLZ's dividend is "just" $0.13/share which was down from $0.29 in September 2012 (which was paid before the Kraft/Mondelez transaction), I am bullish with MDLZ's future growth.   With the economy improving, consumers would be buying more snack foods and drinks.  Also, with Easter, Memorial Day and summer just around the corner, I expect a jump in sales for Cadbury chocolates, Nabisco and Oreo cookies and Tang beverages.

Anyways, here's a recap of my purchase:

I transferred $250 into our brokerage account (expected funding on 03/25/2013, Monday).

Along with my $184.50 cash position, I executed an Automatic Savings Plan transaction to buy $434 worth of MDLZ shares.

MDLZ is at $29.81 as of 03/22/2013 11:58 am ET

I estimate to buy 14.4666 shares of MDLZ at $30/share.

I would then own 26.3008 shares of MDLZ which will pay me $3.4191 in dividends.

As always, our dividend payments would be reinvested to buy more shares (0.1139 shares @ $30).

As you would observed, without the $4 discount, the dividend payments would have been swallowed by the fee. Also, I would only be able to buy $430 worth of shares which only buy me 14.3333 shares which will bring me to 26.1675 shares = $3.4017.  A net loss of $0.0174.  Yeah, it may be a small loss but the greater loss is in the future growth due to compound growth rate.  The more shares I own, the greater my dividend payments.

In other news, Waste Management just paid me some dividends. 

We got paid $4.40 in dividends which we reinvested to buy more shares (0.1162 shares @ $37.87).

Extra Credit:  I have read/heard speculation that Apple (AAPL) is "poised" to boost it's dividend payments by 56% (from $2.65/share to $4.14/share) for a 3.7% yield. As you can imagine, shares are up (currently at $459.37) since news of the hike got out.  Although it's a far cry from it's 52-week high of $705. 07, this recent bump may be what nervous shareholders need.  I believe that AAPL being below $500 is really cheap and that it's recent drop is a result of both self-inflicted wounds and external stabs to the company.  From the botched Apple Maps launch to the profit taking during the fiscal cliff, Apple's stock has seen a nose dive to $419 before stabilizing at the $420-$430 range.

In spite of Apple's iPhone 5 and iPad sales being through the roof, Wall Street's expectations are just too high for the Company to beat.  On top of that, Samsung's victories (court judgements and sales) did not help Apple's share price.  But last week, I saw a small glimmer of hope for Apple.  Samsung just launched their new flagship phone, the Galaxy S4 with hype that matched the iPhone but execution that fell flat on Samsung's face.  The whole presentation just showed how masterful Apple's product presentations are.  Samsung's "show" was generally panned by tech journalists and even mainstream media.  The phone however, is a different story.  It told me what I needed to know about Samsung's vision of their phone's future: more of the same.  Critics blasted Apple for the iPhone 5's lack of a differentiating features and design that Samsung seemed to outpace Apple in both fronts.  But with the Galaxy S4 looking and functioning almost the same as the Galaxy S3, I believe Samsung is now experiencing a lag in their "wow" factor. 

In my opinion, it would be tough for Samsung to be "innovative" without Apple to "copy" from. 

That's just my opinion so take it as it is.

So why is this good news for Apple?  Well first, current Galaxy S3 owners have not much of a reason to buy the new S4 which could be the opening for Apple to snatch some of the market share back from Samsung.  Currently iPhone 5s or iPhone 6 rumors have been leading towards a new phone design and with iOS 7 around the corner (WWDC is usually held in June), Apple fans will have a reason to hope.  News of the iWatch and iTV also help fuel speculation that Apple may be launching a new product market that would bring back the Apple cool factor that Steve Jobs used to bring.

So will 2013 bring Apple back on top?  Only time will tell.

Dividends and Updates

Happy New Year!

 

So the US did not end up over the Fiscal Cliff (we came close though).  I was not surprised that a deal would be made but was surprised with the amount of time it took for them to do something.  Anyway, we're currently not in financial Armageddon and the Stock Market moved on.

 

So here are some updates:

 

The Social Security Tax holiday ended on January 1, 2013 which resulted in smaller take home pay.  I still have to see how much impact this new development will have in my (our) investing capabilities.  I highly doubt it would affect us much but as I always say, if a 2-5% tax increase would hurt you, you're doing it wrong.  Luckily, we kept expenses are low and we built a huge emergency fund so as much as it hurt, I think we'll be fine financially speaking. 

 

To offset the loss of a few hundred dollars, I'm happy to report that our portfolio got paid some dividends.

 

On 01/14/2013, Mondelez paid $1.53 in dividends.  It was reinvested and bought 0.0558 shares of MDLZ at $27.42/share.  On the same day, Kraft also paid dividends.  We got $1.96.  It was reinvested and bought 0.0423 shares of KRFT at $46.34/share.

 

Also, on 01/10/2013, Altria paid $4.71 in dividends.  It was reinvested and bought 0.1476 shares of MO at $31.91. 

 

Granted these dividends are small peanuts compared to the "lost" take home pay but over time, these reinvested dividends would compound and make us more money in the long term.  Besides, it's better than nothing.

 

By the way, I'm not concerned with Apple's over 200 point drop.  As long as Apple manages to use or save  the over $150 Billion dollars in cash in the bank, I am confident they will find a way to release more exciting products either by in-house development or through acquisitions.  But we'll have too see with their earnings call next week.  I have a feeling that even if Apple bottoms out at $400, it would just be a perfect buying opportunity to get more shares and we'll have to have on as it goes back up to around $600.  Besides, the stock is still cheap compared to it's competitors.

 

Meanwhile, I'll keep investing in other sectors that would hedge the current hatred with Tech Stocks.

 

More to follow!

 

Playing Defense, New Dividends and Split Companies - A Year-end post

It has been a while since I posted something substantial concerning the portfolio.

 

I have been busy with work, co-planning (more like following) the honeymoon and multiple life events that will not be discussed in this post.  Suffice to say, I have been delinquent with my posts and for that, I apologize.

 

Now, with that out of the way, let's get on to business.

 

These days, the Market has been pummeled by the whole Fiscal Cliff discussion.  For those not in the know, if the US Government fail to come up with a deal to fix the budget deficit, there would be a catastrophic sequence of events that might bring the US back into a recession.  Automatic cuts in services, Defense and across the board tax hikes would probably spell disaster not only for the US but for the global economy as well.  That is why we've seen a lot of CEOs, insiders cashing out their stocks to take advantage of the current capital gains tax rate which in my opinion explains why high-flying stock such as Apple (AAPL) dropped so much in recent weeks.

 

Nonetheless, I think playing defense against a possible sell off/crash would be a prudent course of action which brings me to my last move for the year.

 

As you may know, I stocked up on my cash position in preparation for a possible Mitt Romney win in November.  I wanted to be in a position to buy GOP/Wall St-friendly stocks such as Defense Stocks (Lockheed Martin) and the Financials (the banks).  However, Mr. Obama managed to sneak in a win (good news/bad news, I'll leave that to you.  This is not a political blog) and the current status quo was maintained.  I left my cash reserves alone until after my honeymoon while I collect and analyze the data, news and trends from afar. 

 

Now, I have made my decision, I decided to use the $500 I have from the reserves to buy the GLD ETF.  The order was executed today (12/18/2012) and with the $4 fee (automatic investment), I got 3.0255 shares of GLD at $163.94/share.  The GLD is my hedge in case the US does go off the so call Fiscal Cliff where taxes would go up, the economy would go back into recession and stocks would drop.  The GLD would be my firewall in case my portfolio would take a hit and it would also be prudent to bring up my GLD position closer to the recommended 20% of my portfolio (It is currently at 16.7% including today's purchase).   Eventually, I want my AAPL position at around 10-15% of my portfolio (currently at 23%) and the rest of my positions at roughly 10-15%  so that I would not be heavily affected by the now "volatile" Apple stock.

 

In other news, I have received dividend payments since my last post.  It is safe to say, at least my portfolio was "working" on it's own.  Here's the breakdown:

 

Altria (MO): 10/10/2012 = $4.65 -> 0.1387 shares at $33.53.

Ex-Dividend Date: 12/21/2012 and Dividend Date: 01/09/2013

 

Waste Management (WM): 09/21/2012 = $4.19 -> 0.1287 shares at $32.56

                                           12/14/2012 = $4.24 -> 0.1260 shares at $33.65

 

Xilinx Inc. (XLNX): 08/29/2012 = $1.98 -> 0.0585 shares at $33.85

                               11/28/2012 = $1.99 -> 0.0584 shares at $34.08

 

Energy Transfer Partners (ETP): 08/14/2012 = $9.71 -> 0.2223 shares at $43.68

                                                 11/14/2012 = $9.91 -> 0.2354 shares at $42.10

 

Apple (AAPL): 08/16/2012 = $5.69 -> 0.0090 shares at $632.22

                        11/16/2012 = $5.71 -> 0.0106 shares at $538.68

 

Kraft (KFT -> KRFT + MDLZ): 07/17/2012 = $3.39 -> 0.0854 shares at $39.70

                                                   10/15/2012 = $3.42 -> paid to the cash fund which is possibly taxable.

 

Kraft did something special this year.  It broke up the company into 2 different companies which resulted in me having the following stock positions:

Kraft Foods (KRFT) = 3.9261 shares

Mondelez International (MDLZ) = 11.7784 shares

 

KRFT Ex-Dividend Date: 12/27/2012 and Dividend Date: 01/13/2013

MDLZ Ex-Dividend Date: 12/27/2012 and Dividend Date: 01/13/2013

 

KRFT will be the North American Grocery Division which will carry the Velveeta, Miracle Whip and Oscar Meyer brands.

MDLZ will be the Global Snacks Division which will carry the Cadbury, Milka, Oreo and Nabisco brands.

 

So far, both companies are performing well and upon further review, I would decide which of the two I would focus on. 

 

That's it. 2012 is over and the portfolio has survived the Elections, a Tech downturn and even the Apple sell off.  Not at all bad even though I could have locked in my Apple gains 3-4 months ago.  But there is no use reviewing the past.  I am still bullish on Apple and next year could be a big one for Apple with China, the rumored Apple TV set, the iPhone 5s and a possible refresh of the iPad.  If there is one thing I want Apple to deliver for next year it would be a more innovation iOS 7.  In as much as I love the iOS software, it would not hurt to have more innovation in the software and increase their lead from the Android OS.

 

With that, I would like everyone to have a happy holidays.

Dividends and the Europe Recession

First some portfolio updates:

Since my last post, I have received dividend payments from Xilinx Inc. and Waste Management.

Xilinx Inc paid me a total of $1.97 in dividends which I reinvested and bought 0.0618 shares at $31.88.

Waste Management paid me a total of $4.14 in dividends which I reinvested and bought 0.1277 shares at $32.42.

On deck is Kraft (KFT).  Tomorrow is their Ex-Dividend date (06/27/12) and I'm speculating a dividend date sometime in July or August.

I recently became aware of a Real Estate Investment Trust (REIT): Realty Income Corporation (Ticker symbol: O).  What struck my fancy was the monthly dividend payments this REIT pays.  It's current dividend yield pays at 4.40% and has been up about 3 points since I got introduced to it.  

On the surface, this looks like a great investment but I still have to do my homework (and accumulate enough capital to buy a sizable position) to see if the monthly dividend is worth having another position to manage.

Meanwhile, Europe has been pulling the global economy down... at least it feels that way.  Spain and Greece are currently experiencing what the US had gone through in 2008.  Basically, all the US can do is wait and hope that Europe would figure out a way to fix this recession.  

I'm just happy that my portfolio and retirement accounts have managed to survive this Euro situation.  I'm sad that I currently don't have enough capital to double down on my positions and mutual funds (car repairs would do that).

Hopefully this would be an opportunity for me to keep buying while everyone seems to be selling.  Good times for the bullish!

Automatic Investment Plan for March 27, 2012 And Some Updates

I was able to beat Kraft's (KFT) Ex-Dividend date of March 28, 2012.  My order of $350.00 worth of KFT stock posted on March 27, 2012.  I locked in 9.0937 shares at $38.49 a piece.

Also, on March 23, 2012, Waste Management (WM) paid a dividend to their investors.  I received $1.84 and reinvested it to get more shares.  The dividend bought me 0.05727 shares at $34.91.  It is so nice to get paid just by investing in a company.

To recap, our portfolio looks like this:

AAPL  = 2.1473 shares   = $1,331.11 (Market value as of 10:45 am 04/04/2012)
ETP     = 6.7367 shares   = $313.12 (Market value as of 10:45 am 04/04/2012)
GLD    = 2.1581 shares   = $338.77 (Market value as of 10:45 am 04/04/2012)
KFT    = 11.6030 shares = $443.47 (Market value as of 10:45 am 04/04/2012)
LULU  = 7.3301 shares   = $548.36 (Market value as of 10:45 am 04/04/2012)
MO     = 10.3151 shares = $321.83 (Market value as of 10:45 am 04/04/2012)
WM    = 5.2271 shares   = $182.69 (Market value as of 10:45 am 04/04/2012)
XLNX = 6.2860 shares   = $221.90 (Market value as of 10:45 am 04/04/2012)

Cash available = $225.68
Total Portfolio Value = $3,926.92 (Market value as of 10:45 am 04/04/2012)

If I were to play Jim Cramer's Am I Diversified Game where I look at my top 5 positions:
1. AAPL - Tech
2. LULU - Retail
3. KFT - Consumer Staple (Food)
4. GLD - Gold ETF
5. MO - Consumer Staple (Vice)
You will see that KFT and MO are overlapping sectors.  Normally I would have to switch out the weaker stock and replace it with either an energy, biotech of financial stock.  However, I can argue that KFT is more of a food and household pantry play and MO is more of my consumer vices play.  Also, both positions pay healthy dividends and are great recession plays.  People would still eat food (probably pre-packed like Kraft's Mac & Cheese) and addicted smokers will still smoke (as shown by my brother and sister).  So perhaps, I can get away with the overlapping sectors.

A small note:
Last week's Mega Millions Lottery price peaked at $656 Million dollars.  As millions of hopefuls lined up for hours and spent hundreds (some even thousands) of dollars on tickets with the hope of winning that record prize.  In spite of the lousy 1 to 176 million odds, people still hoped and prayed that they win the lotto.  Majority spent most of their disposable incomes (or worse, borrowed money) to gamble where the odds just plain suck.  If only they used some of the money to invest in a ROTH IRA or buying stocks, they would probably beat 99.9% of the Mega Millions hopefuls and made some money.

I for one, made some real money and only "lost" $1 in a Mega Millions Office Pool (Hey, it doesn't hurt.. All I needed was to be the 1 in 176 million).

Uncle Sam's Cash Back, Apple Goodness, Promos and Some Cheesy Dividends

Our household recently received our State and Federal tax refunds.

After spending $1000 to help pay down my wife's car payment, we decided to split the remaining cash equally between the two of us.  Then my wife asked me: "What would you buy with your share of the refund? An iPad?"  I answered: "I'll buy more mutual funds for my Roth IRA and some stock for our taxable investment account."

She smiled.

For the past four years, I have used my tax refunds to invest in my Roth IRA.  I figured, why spend money and pay more taxes (sales tax) when I can just make more "tax free" money in my Roth IRA?  The answer is a no-brainer.  Reinvesting my tax refunds in my Roth made me more money and gave me more satisfaction compared to whatever gadget I would have bought.  I love making (easy) awesome decisions.

So what did I buy with the money?  I checked our portfolio and checked which stock had the closest Ex-Dividend date.  It turns out Kraft (KFT) would have their ex-dividend date on March 28, 2012 (next Wednesday).  I then transferred money to the account and set-up the Automatic Investment Plan for Tuesday, March 27, 2012.  This should be enough time for me to get the stock before the ex-dividend date and be eligible for the dividend.

Here is a breakdown of my transaction:

1. I transferred $350 to the account (the rest of the money will go to my ROTH).

2. I set-up the automatic investment plan.

3. I'll buy $350 worth of KFT shares - Potentially 9.1217 shares @$38.37 (as of 9:47am today).

4. There is no fee this time due to a promo (Thanks!)

5. I'll potentially own 11.6310 shares of KFT.

6. KFT currently pays a $0.29/share dividend - $3.37299 potential payout.

Thanks to Kraft, I'll have a nice and "cheesy" dividend. LOL

In other news, last Monday, Apple announced that they would pay a 1.8% dividend ($2.65/share quarterly, $10.60/share annually) to its investors.  Apple will also spend $10 billion to do a stock buyback.  This will reduce the number of stocks outstanding which would mean every remaining investor would own more of the company.  This obviously is good news for me.

The dividend payout would allow "value-oriented" mutual funds to invest in Apple.  In my opinion, this is both good and bad news.  The good news is that Apple would be exposed to more mutual funds and the bad news is that this opens Apple to more volatility as mutual funds' dollars goes in and out of Apple depending on how the stock and the market performed on a given day.  This also makes diversification a bit tougher as I expect a flood of new mutual fund investors.  I suggest checking your mutual funds' holdings and try to be as diverse as possible.

The dividend is a welcome bonus for me as an investor.  Although the dividend yield is not as huge as HP, Microsoft and the others but the growth rate and performance of Apple more than makes up for the comparatively "small" dividend.  Besides, I'm more bullish of Apple than HP.

Tempting as it is to get more Apple stock, I'll keep my emotions in check and keep our portfolio as balanced as possible.  We still have a long way to go.

New Year, New Stock Positions

One of my New Year's Resolutions is to find new companies to invest in.  Even though my portfolio did well in 2011 in spite of the end of year Euro woes, I still need to have more diversity that would shore up my performance and hedge my bets from volatility.

In 2011, I noticed most of my gains came from AAPL and at times, LULU.  I am grateful but I believe I need something that would perform well and would take the load off AAPL and LULU.

Therefore, I'm looking for companies that would be a great fit in my portfolio.

I am currently looking at Altria (MO). This company is in the Consumer Goods sector where it is in good company with Pepsi (PEP, General Mills (GIS), Clorox (CLX) and Kraft (KFT).  Basing on the PEG rations, only KFT beat MO in terms of being "cheap" in an apples-to-apples comparison.

Looking at the charts, both MO and KFT trended closely together throughout 2011.  Both outperforming the S&P 500.

MO's financials looks solid according to their latest 10-Q filing and they are cash flow positive this last quarter thanks to a debt refinance that was done in the previous quarter.  MO had a pre-tax judgement made against them, however, they have been proactive in lowering their yearly guidance and enacted some cost-cutting measures in order to preserve the dividend yield and business did well enough to off-set the additional expense for this quarter.  Even though there was a slight decrease of market-share among smokers, the success of the e-cigarette helped boost MO's earnings.  As sad as I am to say this, as long as people smoke, I would remain bullish with MO.  I'll just watch out for government regulations, additional taxes and class-action lawsuits against MO.

Altria's Numbers: Jan 10, 2012 end of trade day
last trade = $28.91
day's range = $28.78-$29.00
52 week high = $30.40 low = $23.20
P/E = 17.30
EPS = $1.67
Div & Yield = $1.64 (5.70%)
PEG = 1.74

Kraft's Numbers: Jan 10, 2012 end of trade day
last trade = $38.02
day's range = $37.90-$38.15
52 week high = $30.21 low = $38.05
P/E = 20.74
EPS = $1.83
Div & Yield = $1.16 (3.10%)
PEG = 1.66

Kraft is in the diversified foods industry and keeps MO company in the consumer goods sector.  It would be almost impossible to not find a KFT product in a typical household pantry.  In the Nov 4, 2011 10-Q filing, KFT proposed to spin-off its businesses into 2 independent public companies: 1) The Global Snacks Business and 2) The North American Grocery.  Of course, this would be subject to regulatory review and it would probably cost the company a lot of money and might trigger some sell-off from nervous investors.  KFT posted an increase in net revenues and is expected to keep growing as the operating costs would go done as soon as the integration of Cadbury is complete.

Not everything is rosy in KFT as they have a legal dispute with the Starbucks CPG Business over breach of agreements concerning the control of the Starbucks packaged coffee products in the grocery store.  This dispute can be a distraction and legal fees might eat in the gross profits of KFT.

KFT's income statement looked solid although the cash flow statement made me a little uneasy.  As I mentioned before, I am wary of companies who have a negative cash flow.  Although KFT can explain this by the Cadbury acquisition and the spin-off proposal, I still worry about debt repayments that are due and interest payments from these loans.  I'm sure management would refinance and pay down these debts but the prospect of not having enough cash could mean a cut in the dividends or massive lay-offs just to keep the stock price from dropping.

My worries were alleviated a bit by the knowledge that Berkshire Hathaway and the Vanguard Group are invested in KFT.  Cramer also recommended getting some KFT along with wallstreet analyst giving it a strong buy.  If I were to buy KFT, I would base it it's growth estimates and customer mind share.  Besides, packaged food is not a cyclical product as people would still eat in spite of the recession.

Here's what I'll do:

I'll buy MO and KFT.  I'll put in $100 in each position which after fees would yield me 3.32 share of MO and  2.52 shares of KFT (est based on today's closing prices).  My target to ride the current upward trend of these stocks and to keep buying if these stocks end up in a sell off.  I'll use these positions as my recession defense stocks which I expect would take the load of my AAPL and LULU stocks.